Kraken Review: Don’t Sign Up Until You’ve Read This

It’s official: Since its launch in 2011, Kraken has grown to become one of the largest Bitcoin exchanges in the world, with a current market share of over 9% and growing. Its origin story? This San Francisco-based cryptocurrency exchange was founded by CEO Jesse Powell after witnessing first hand how poorly the now infamous Mt. Gox was run.

Recognizing how important Bitcoin was going to be, Jesse applied his entrepreneurial expertise into creating a professional exchange that would be intelligent, powerful, agile, robust and secure. Thus, the name Kraken – you know, of legendary sea monster fame.

Thanks to his efforts in building a stable and compliant exchange, Kraken became the first Bitcoin exchange to provide complete Bitcoin market date to the Bloomberg Terminal as well as the first to pass a cryptographically verifiable proof-of-reserves audit.

To date, Kraken remains one of the biggest names in the cryptocurrency market and is well known to most investors looking to buy and sell Bitcoin.

That’s all good and dandy, you say, but how does this serve me and is it the best cryptocurrency exchange for my needs? Well, let’s find out – here’s a deep dive review into exactly what you can expect from Kraken!

Kraken Pros and Cons

Before we delve into the nitty gritty of our Kraken review, here’s a quick look at what you can expect!

The good:

Internationally accessible. Kraken is based in the US but great for European investors since they’re the largest exchange for crypto-EUR trading. They’re also a top choice for international users since they’ve been expanding globally and are open to investors around the world.

Low trading fees. Kraken has some of the best fees for trading, making them a great choice especially for high-volume traders. They also offer very competitive fees for fiat deposits and withdrawals in certain areas, i.e. Europe, Canada, Japan.

Great range of options. One of the unique advantages Kraken has over other exchanges is their range of supported fiat and digital currencies. Thanks to this, you can buy a variety of cryptocurrencies directly with a number of fiat currencies instead of having to buy BTC first and then using another exchange to buy other alt coins. Here’s a look at the available currencies:

Established and credible. Kraken is one of the largest exchanges as of 2017, with a global market share of around 9% and with a reputation as the largest Bitcoin exchange in euro volume and liquidity.

Solid security. The majority of digital assets are held in cold, offline storage and servers are held in fully secure facilities with armed guards and retina scans. Kraken was also the first exchange to carry out proof-of-reserves auditing.

Good for active traders. Kraken is unique in that they are one of the few fiat-to-crypto exchanges that offers a fairly wide range of cryptocurrencies for trading, allowing you to make direct trades between all available pairs. They don’t support derivates or futures trading but users can use limit orders, advanced orders with predefined triggers, leveraged positions, margin trading as well as short selling.

The not-so-good:

Customer service. One of the common complaints you’ll find about Kraken is its lack of customer support. There’s no phone support and email can be slow, which is why some of the best ways to get in contact with Kraken’s support include social media channels like Twitter and Reddit. Which may be adequate for run-of-the-mill issues but not so great when you need immediate assistance.

Beginner friendliness. Kraken’s interface is clean and very functional for most but if you’re a complete beginner, it doesn’t offer the same sort of simplicity and ease-of-use as, say, Coinbase.

Higher deposit and withdrawal fees. Kraken’s deposit and withdrawal fees can be very advantageous if you’re using domestic transfers in the US, Japan, Canada or an EEA country. But for international transfers, they can be as high as €60.

Uptime issues. One thing to keep in mind if you’re a professional trader is that Kraken has been guilty of uptime problems and slow execution of orders, especially when the market gets hot.

Overall, Kraken’s downsides aren’t unique – they apply to the majority of cryptocurrency exchanges. And when you factor in that Kraken has unique functions that you can’t find elsewhere – like the vast range of fiat/crypto pairings – it definitely makes this exchange worth checking out. Read on for an in-depth look at what you can expect!

What Countries are Supported?

Before we get into the nitty gritty of using Kraken, you’ll first want to know if it’s even available in your area, which brings us to an interesting point: Unlike many cryptocurrency exchanges, Kraken is available worldwide.

Kraken’s international appeal is apparent right from the initial registration page, where it allows users from Afghanistan to Yemen to register on the site, complete with each country listed in its native language.

But before you get too excited – Kraken’s worldwide availability sounds great in theory but it plays out differently in reality.

For example, Kraken allows you to signup from pretty much anywhere in the world but for certain countries, it requires further verification such as a social security number for US-based accounts and ID confirmation for Germany and Japan. So you may have to jump through more hoops to qualify for bank funding if you live in certain areas.

More significant are the fees for deposits and withdrawals. Currently, Kraken supports these fiat currencies:

Euros

US dollars

Canadian dollars

Japanese yen

Sure, this is a pretty good range compared to, say, Gemini Exchange, which only supports USD. But it also means the deposit and withdrawal fees make Kraken much more advantageous for people in certain regions.

For example, EUR SEPA deposits in EEA countries are free. So are JPY bank deposits in Japan as well as CAD wire deposits. Other countries will have to pay a deposit fee ranging from $5 USD to €10.

It’s the same for withdrawals – Kraken offers very low withdrawal fees for EUR SEPA withdrawals within EEA countries but for others, the withdrawal fees can go as high as €60.

This means that Kraken may allow investors from any corner of the globe, but it is a more advantageous platform for investors based in EEA countries as well as Japan, Canada and the US.

What are Kraken’s Fees?

While we’re on the topic, let’s take a look at the fees Kraken charges for trading, deposits, and withdrawals. Let’s start with trading…

Trading Fees

One of the best things about Kraken is that they offer very competitive trading fees, especially for high volume traders.

In short, Kraken’s trading fees start at 0.16% for the maker and 0.26% for the taker. As trading volume increases, you get trading discounts that can take the fees all the way down to 0.00% for the maker and 0.10% for the taker. You can find all their trading fees in detail here.

Deposit Fees

EUR SEPA Deposit: Free, in EEA countries only

EUR Wire Deposit: €5 with Fidor,€10 with SMBC

USD Bank Wire Deposit: $5 USD domestic

USD Bank Wire Deposit: $10 USD international

JPY Bank Deposit: Free, ¥5,000 deposit minimum, Japan only

CAD Wire Deposit: Free

The upside is that Kraken offers free fiat deposits. The downside? They do take awhile – around 1 to 5 business days for most and as much as 5 to 12 business days for CAD wire transfers.

Digital assets, as you know, are much, much faster. Plus, most of the digital currencies are free to deposit – that includes:

Withdrawal fees apply to all digital currency, although the fees are small:

Bitcoin (XBT): ฿0.001

Ether (ETH): Ξ0.005

Ripple (XRP): Ʀ0.02

Stellar (XLM): 0.00002

Litecoin (LTC): Ł0.02

Dogecoin (XDG): Ð2.00

Zcash (ZEC): ⓩ0.00010

Iconomi (ICN): ICN 0.2

Augur (REP): Ɍ0.01

Ether Classic (ETC): ξ0.005

Melonport (MLN): M0.003

Monero (XMR): ɱ0.05

Dash (DASH): Đ0.005

Dash Instant: Đ0.01

Gnosis (GNO): Ğ0.01

Tether (USDT): USD₮ 5

EOS (EOS): Ȅ0.50000

Bitcoin Cash (BCH): ฿0.001

Overall, the deposit and withdrawal fees are okay. For example, Bitcoin is free to deposit but the withdrawal fee of ฿0.001 translates to around $6 USD (as of October, 2017). That’s not cheap, especially if you plan on consistent withdrawals.

It’s particularly not cheap when compared to the deposit and withdrawal fees found on other exchanges, such as Gemini Exchange, which has the perk of offering free deposits and withdrawals.

The exceptions, of course, is if you live in the US, Canada, Japan or an EEA country where you can deposit and withdraw fiat for cheap. Or if you’re looking to cash in Bitcoin, Litecoin or any of the other free deposit cryptocurrencies – you can deposit for free and cash out relatively cheap, if you’re in the US, Canada, Japan or an EEA country.

How Long is the Signup Process?

The whole point of signing up to a cryptocurrency exchange is to buy and sell cryptocurrency, right? So you obviously want the whole process of signing up to buying your first coin to be as quick and seamless as possible.

So how long does it take to get from point A to point B with Kraken?

Well, it depends.

Kraken’s account system is multi-tiered, with each higher tier offering more services but requiring more information.

Here’s a quick look at the tiers:

As you can see, the lowest tier – Tier 0 – is pretty much useless for anything whereas the highest tier – Tier 4 – would only be applicable for the highest volume trading individuals.

For the rest of us, let’s break down what you can do at each tier and how long it takes to get verified!

Tier 1

Time it takes to get verified? Only a few minutes.

Required? Full name, date of birth, country and phone number.

Quick and easy to sign up for but this account is good for depositing and withdrawing digital currencies only. Trading, however, is enabled in digital as well as fiat currencies. But it’s crucial to remember that you can’t withdraw in fiat and there is a limit for withdrawing in cryptocurrencies as well.

Tier 2

Time it takes to get verified? Only a few minutes (unless the application requires manual review)

Required? Proof of residence.

This tier is suitable for the majority of average cryptocurrency investors, allowing you to deposit, withdraw and trade in digital currencies as well as fiat currency (although this depends on your country of residence) but it’s not available to everyone.

For example, if you want to deposit fiat in the US, Canada, Germany, Japan, and other countries depending on what currency you intend to deposit, Tier 3 verification is required.

Tier 3

Time it takes to get verified? Usually just a few days (unless there’s an influx of new signups)

Required? Government-issued ID, recent proof of address. Plus, if you’re in the US, Germany, or Japan, you’ll be further required to submit either a social security number (US-only) or an ID confirmation photo. Even if you’re not a resident of these 3 countries, you’ll still be required to submit an ID confirmation photo if you’re using domestic USD funding.

Tier 3 is pretty much like opening a bank account and whereas you will be able to deposit and withdraw larger funds, you’ll also be required to jump through more verification hoops which takes time.

Is Kraken Safe?

This is one of the most important questions you can ask about a cryptocurrency exchange before depositing large sums of your hard-earned money into their coffers.

And when it comes to Kraken, safety is top-notch. It’s considered one of the most secure cryptocurrency exchanges as of now. But you want more details, of course, especially when it comes to the security of your precious coins. So let’s take a more detailed look at the good and bad of Kraken’s safety.

The good:

Offline, cold storage. The majority of coins are stored in cold, offline and encrypted wallets with air-gap isolation from any online system and only the coins that are necessary to maintain operational liquidity are stored in hot, online encrypted wallets.

Fully protected servers. All of Kraken’s servers are held in secure, locked facilities with armed guards,video surveillance, and retina scans.

Maintains full reserves. Kraken was the first company to create a cryptographically verified proof of reserves which shows that it holds 100% of customer funds so something like a bank run would be an impossibility. They continue to maintain full reserves of customer funds which are held in a separate bank account from their operations account.

Strong security protocol. Kraken has strong operational procedures for safety, such as using separate networks for separate purposes, which means that each function – i.e. account verification, support – has its own system and thus cannot compromise others. They also thoroughly vet their staff and require multiple sign-off for anything sensitive.

No large-scale hacks. It should be noted that Kraken has never been hacked – the instances of security breach have been due to lack of security on the customer’s part, not Kraken’s. Just keep in mind that this may be reassuring to hear but does not mean it’s immune to future attacks. Cryptocurrency exchanges like Kraken are honeypots to hackers so don’t make the mistake of being lulled into a ‘no-hacks-(yet)-it-must-be-safe’ complacency and take the necessary precautions to make sure your funds are safe.

The not-so-good:

2FA is not required. This is one of our biggest gripes with Kraken – they don’t make it mandatory to set up 2 Factor authentication, which is a very basic level of security that you should use with all cryptocurrency exchanges, until you get to Tier 4. This should be a requirement for all tiers.

Not FDIC insured. This one’s another big one since it means that fiat deposits as well as digital assets are not insured. That being said, Kraken does maintain top-notch security to prevent hacks from happening in the first place and plus, it should be noted that most cryptocurrency exchanges aren’t FDIC insured (with the exception of Coinbase/GDAX and Gemini).

Phone phishing. Kraken does not offer phone support. It does not have a phone number. And it doesn’t contract with any external company for phone support. So any phone number a frustrated customer finds while searching for Kraken’s customer service is the bait for a phishing scam. Kraken does warn about this on their Help Center and their Twitter feed but they need to make this more clear – perhaps when you sign up – as people have fallen prey to these scams.

Keep in mind that when it comes to cryptocurrency exchanges – the onus is on you, the investor, to make sure your account is protected and secure. Kraken offers a lot of flexibility in account security options, which means that it can be tempting to choose the easiest option, such as using a static password for 2FA login, without fully taking into account the consequences.

So take responsibility for the security of your assets by using a one-time password (OTP) for the 2FA – yes, even if it is annoying – and keeping most of your cryptocurrency in a secure, private wallet that you control yourself.

How’s the Customer Service?

It’s no secret that when it comes to most cryptocurrency exchanges, customer service leaves much to be desired. And Kraken is no exception. In fact, the majority of customer complaints against Kraken are about how difficult they can be to get ahold of and how long they take to resolve issues.

When it comes to customer support on Kraken, you have 5 options.

SCAM ALERT: Please keep in mind that phone service is NOT one of the options. Kraken does not offer phone support nor do they have a phone number. If you find a phone number for Kraken support online, it’s a phishing scam – do not call it. Instead, let Kraken know about it so the scammers can’t trick others.

Here are the actual options for customer support:

Help Center. The first place you’ll be directed to is Kraken’s Help Center, which is pretty much a listing of articles on common questions, complaints and issues. Not super helpful when your question isn’t listed there.

Support Request (Email). You also have the option to contact Kraken via email by clicking on the “Submit a Request” button at the top right of the page. Their response time seriously varies so this is the first thing you should do but it’s recommended you follow it up with others, like…

Escalate Your Claim. If you haven’t heard back after sending a support request, they advise that you escalate your claim by filling out this Google Doc. Still don’t hear from them? Now you’ll want to go public…

Twitter. Yes, seriously – Kraken seems a lot more likely to take notice of your issue when you tweet at them @krakensupport.

Reddit. If you’re a part of the ever-active Reddit community, another option is /r/krakensupport. You’ll have to make a new post there with your support request number in the title. Make sure you create a separate, new post instead of commenting on someone’s else issue so they don’t miss you.

As you can see, trying to quickly get ahold of someone at Kraken who can help you with your problem is not the funnest thing you can be doing on a Friday night. Or even a Tuesday afternoon, for that matter.

You basically have to resort to stalker mode to get a response from Kraken – which is why we’d rate Kraken’s customer service as sorely lacking.

Their other stronger features – like competitive trading fees and security – can make up for this but we’d definitely advise that you don’t use Kraken alone. Sign up for a few other cryptocurrency exchanges since the last thing you want is a frozen account with unresponsive support when Bitcoin prices are dropping fast.

Is Kraken Worth Signing Up For?

Kraken isn’t perfect. But then again, no cryptocurrency exchange is. Plus, depending on your needs, Kraken’s shortcomings are more than made up for in the unique advantages it offers.

For example, since Kraken serves a worldwide market, it’s a great choice for an international investor who wants to trade on one of the largest, most varied, fiat-to-crypto exchanges. And if you’re an investor who has a EEA, US, Canadian or Japanese bank account, the competitive deposit and withdrawal fees along with the cheap trading fees can make it worthwhile.

That being said, if you’re an active investor – Kraken should not be the only exchange you sign up for, considering its occasional uptime issues, especially when the crypto markets get hot. But it should definitely be on your list.

Plus, it’s free and it takes only a few minutes (on your part) to register. So sign up already!

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